The Range of Benefits from the Application of Corporate Planning Budgets in the Mining and Extractive Industries in Jordan

Abstract

This study aims to recognize planning budgets, determining the range of benefits of applying them within public Shareholding mining and extractive industries, determining how management utilize budgets in management decision making and the importance of having them prepared by different managerial levels.The study population consists of mining and extractive public shareholding companies that are listed in the Amman stock exchange, consisting of 12 companies according to the monthly statistical bulletin produced by the Amman stock exchange for November of 2011. The study sample 10 randomly chosen companies, were the proportion of the population of the study sample was 83.4% as each company filled out 4 questioners.A set of hypotheses were formulated to achieve the objectives of the study. A questionnaire was designed and it was addressed to managers and heads of departments in mining and extractive public shareholding companies in Jordan. A total of 40 questioners were distributed, 36 were turned back in for statistical analysis resulting in a 90% f the study sample.The study relied on two sources of data collection; primary sources were obtained through a field study by distributing questioners, and secondary resources were obtained by examining books, other studies, and theses that considers similar topics.The results of the study has shown that Jordanian mining and extractive public shareholding companies greatly benefit from the application of planning budgets in several areas that include: Planning, coordination, communication, motivation stimulation, allocation of resources and reduction of waste, predicting the occurrence of problems, auditing and performance evaluation. The study also found that managements rely on planning budgets in their decision-making, which is very important to improving the efficiency of management in making sound managerial decisions in a timely manner. In addition the study pointed to the companies’ increasing interest of having planning budgets prepared by all administrative levels which can lead to increasing the proficiency of the preparation of budgets, create greater motivation for the implementation for workers.

The study concludes with a set of recommendations, including:

1. Constant attention to increase the efficiency and cost of the accounting systems already in place in companies to elevate the efficiency of budget plans prepared.
2. Determining the relative importance of deviation shown by the outputs of budget plans. With taking into account separating the deviation of non-realistic plans.
3. Not exceeding the period covered by the budget planning for the extent of questionable predictions to a large extent.
4. Not using budget plans as an instrument of pressure and coercion because the literal adherence of the plan’s numbers when evaluating the performance creates great pressure on individuals in the facility In order to achieve budget numbers, which adversely affects the facility and its goals.